The Basics of Property Taxes

Can you walk us through how to contest your property tax?
Protest strategies vary in different locations, but the first step is the same everywhere: call at the tax assessor’s office in your city and ask to see the figures on your home. Ensure there are no errors in the report.

The next step in some states is to research tax records in your area to see how your taxes measure up to your neighbors. Tax records are open to the public, and you should look specifically at the taxes of properties similar to your own. Hard figures will greatly increase your odds of winning a concession if you believe your home is overvalued.

Check the recent selling prices of nearby properties similar to yours. You may want to consult a real estate broker or appraiser for these figures, but there are plenty of great, free online resources like realestate.com and zillow.com.

When it comes to filing, your tax assessor’s office can give your guidance about how to protest. The first step can be logging an informal complaint with the assessor, then to a local board, either at a regular meeting or on a specific yearly date. If your taxes are not lowered and you are still convinced you are overpaying, you can appeal if you have the wherewithal to keep going.

In most areas, you can enlist a professional to help you, but they will likely charge a percentage of the first few years’ saving if they can secure lower taxes for you.

So overpaying is more common than you might think?
Yes! Statistics vary by area, but According to the National Taxpayers Union, between 30 and 60% of taxable property in the United States is over-assessed, and this leads to higher property tax bills. Middle- and lower-income taxpayers are among the most often over-assessed. But here is the interesting part: Typically, fewer than 5 % of taxpayers challenge their assessments, even though the majority who do so win at least a partial victory when properly prepared. The lesson is that if you think you’re overpaying on property taxes, you probably are. You have the right to contest your home’s tax assessment, and it isn’t as much trouble and red tape as you might think.

Are there other property tax breaks out there that people aren’t taking advantage of?
Absolutely. Each state has different property tax rules. Some states, like New York and Idaho, have property tax reduction programs. Many homeowners are entitled to reductions in their property taxes, but do not receive them simply because they have never applied. Research eligibility in your own state, as there are often abatements for senior citizens, veterans, and those with disabilities.

Mellody is President of Ariel Investments, a Chicago-based money management firm that serves individual investors and retirement plans through its no-load mutual funds and separate accounts. Additionally, she is a regular financial contributor and analyst for CBS News.